3M to Pay $1.3M in Damages to British Gov’t, Investor
A British court on Monday ordered 3M Company to pay damages of $1.3 million to two entities that had invested in a product that 3M acquired in 2007 and took off the market a year later.
The case stems back to 2008, when the Porton Group and Ploughshare Innovations Limited, a subsidiary of the U.K. Ministry of Defence, sued Maplewood-based 3M, alleging that the company had “botched” a clinical trial for a product called Baclite. Porton and Ploughshare Innovations were investors in Acolyte-a company that 3M purchased in 2007 and that had developed BacLite.
The Porton Group said Monday that it had won the court battle, as the London court found that 3M was “in material breach of its obligation” to actively market the BacLite product, and that there were problems identified in the trial's methodology. “I am delighted that we have been vindicated in our attempt to force 3M to face up to their responsibilities,” CEO Harvey Boulter said in a statement.
3M, however, also issued a press release on Monday, touting the outcome as a “decisive victory” for the company and stating that the British court's judgment favored 3M “on virtually every important issue of the dispute.” The lawsuit had originally sought about $40 million in damages, and the final judgment requires 3M to pay only $1.3 million.
“This judgment reaffirms what 3M believed all along-that it acted appropriately in attempting to market this product and ultimately deciding the product was not commercially viable,” Maureen Harms, 3M assistant general counsel, said in a statement.
BacLite helps detect methicillin-resistant Staphylococcus aureus, a type of bacteria that is resistant to certain antibiotics and occurs most frequently in hospital patients who have weakened immune systems. The Porton Group claimed that 3M exhibited “negligence and possible recklessness” through its “botched” clinical trial of BacLite in 2007. And 3M had promised to “actively” market BacLite and to obtain regulatory approvals “diligently” in the United States, Canada, and Australia through the end of 2009, but the product was discontinued in 2008, the Porton Group said.
3M claimed that the BacLite product was not what the company hoped or expected it to be. A 3M spokeswoman told Twin Cities Business in May that the company purchased the product “with the expectation that it was fully developed and ready to market, but it wasn't.”
Monday's judgment resolves the claims against 3M in the U.K. court, although a lawsuit filed by 3M against Porton and Boulter is still pending in the United States. That suit alleges that Porton and its top executive tried to extort more than $30 million from 3M to settle the BacLite case. 3M claims that Boulter sent e-mails to the company's legal counsel that allegedly threatened 3M's business interests in the United Kingdom and its CEO, George Buckley. Porton and Boulter denied the claims, describing 3M's allegations of blackmail as a “false and reckless . . . publicity stunt disguised as a lawsuit.”
3M is Minnesota's fifth-largest public company based on its 2009 revenue, which totaled $23.1 billion. The company reported revenues of $26.7 billion in 2010.